THIRD AMENDED AND RESTATED SECURITY AGREEMENT
THIS THIRD AMENDED AND RESTATED SECURITY AGREEMENT (the "Security
Agreement") is made and entered into, as of January 14th, 1999, by and between
JNC Strategic Fund Ltd., a Cayman Islands corporation ("JNC") and InnovaCom,
Inc., a Nevada corporation (the "Company").
RECITALS
WHEREAS, on June 29, 1998, JNC and the Company entered into a
Convertible Debenture Purchase Agreement (the "June 29th Purchase Agreement"),
and related documents, pursuant to which JNC purchased an aggregate principal
amount of $2,000,000 of the Company's 7% Convertible Debentures Due June 29,
2003 (the "June 29th Debentures"); and
WHEREAS, in connection with the June 29th Purchase Agreement, the
Company also executed and delivered to JNC a Security Agreement (the "Security
Agreement") to secure the payment and discharge of all of the Company's
obligations under the June 29th Debentures and to provide JNC with a continuing
security interest, a first lien upon, and a right of set-off against, all of the
Company's right, title, and interest in the Collateral (as defined in the
Security Agreement), to which any and all rights and claims of any other parties
shall be subordinate; and
WHEREAS, JNC and the Company subsequently agreed to amend and restate in
its entirety the Security Agreement in connection with their entering into a
Convertible Debenture Purchase Agreement dated as of August 28th, 1998 (the
"August 28th Purchase Agreement") in order to provide that the obligations of
the Company pursuant to the Company's 7% Convertible Secured Debentures Due
August 28, 2003 in an aggregate principal amount of $1,500,000 (the "August 28th
Debentures") and other Transaction Documents (as defined in Section 2.1(a) of
the August 28th Purchase Agreement) would also be deemed to be part of the
Obligations (as defined in Section 2 of the Security Agreement) of the Company
under the Security Agreement; and
WHEREAS, subsequently, JNC and the Company again agreed to amend and
restate in its entirety the Security Agreement (as amended and restated pursuant
to the transactions contemplated by the August 28th Purchase Agreement) in
connection with their entering into a Convertible Debenture Purchase Agreement
dated as of December 15th, 1998 (the "December 15th Purchase Agreement") in
order to provide that the obligations of the Company pursuant to the Company's
7% Secured Convertible Debentures Due December 15, 2003 in an aggregate
principal amount of $500,000 (the "December 15th Debentures") and other
Transaction Documents (as defined in Section 2.1(a) of the December 15th
Purchase Agreement) would also be deemed to be part of the Obligations of the
Company under the Security Agreement; and
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WHEREAS, JNC and the Company have now agreed to amend and restate in its
entirety the Security Agreement (as amended and restated pursuant to the
transactions contemplated by the August 28th Purchase Agreement and the
transactions contemplated by the December 15th Purchase Agreement) in connection
with their entering into a Convertible Debenture Purchase Agreement dated as of
January 14th, 1999 (the "January 14th Purchase Agreement," and collectively with
the June 29th Purchase Agreement, the August 28th Purchase Agreement, and the
December 15th Purchase Agreement, the "Purchase Agreements") in order to provide
that the obligations of the Company pursuant to the Company's 7% Secured
Convertible Debentures Due January 14, 2004 in an aggregate principal amount of
$750,000 (the "January 14th Debentures," and collectively with the June 29th
Debentures, the August 28th Debentures, and the December 15th Debentures, the
"Debentures") and other Transaction Documents (as defined in Section 2.1(a) of
the January 14th Purchase Agreement) shall also be deemed to be part of the
Obligations of the Company under the Security Agreement;
NOW, THEREFORE, in consideration of the agreements herein contained and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. Definitions. Unless otherwise defined, or unless the context otherwise
requires, capitalized terms used in this Security Agreement shall have
the same meaning given such terms in the Transaction Documents (as
defined in Section 2.1(a) of the January 14th Purchase Agreement).
a. The following terms shall have the same meaning given such terms
in Article 9 of the Uniform Commercial Code of the State of
California, as amended to the date of this Security Agreement,
and/or any other applicable law of any jurisdiction (whether or
not such other Uniform Commercial Code applies to the Collateral,
as defined herein)(collectively, the "UCC"): Chattel Paper,
Documents, Goods, Instruments, Accounts, Consumer Goods,
Equipment, Fixtures, Deposit Accounts, Proceeds, General
Intangibles and Inventory.
2. Grant of Security Interest. As security for the full and punctual
satisfaction, payment, -------------------------- and performance of all of
the obligations of the Company pursuant to all of the Transaction Documents
referenced in each of the Purchase Agreements (collectively, the "JNC
Transaction Documents"), as such obligations may be amended, supplemented,
and modified from time to time (the "Obligations"), the Company does
hereby, unconditionally and irrevocably, pledge, mortgage, assign, set
over, convey, grant, transfer, and deliver (collectively, "Transfer") to
JNC a continuing security interest, a first lien upon, and a right of
set-off against, all of the Company's right, title, and interest of
whatsoever kind and nature in and to the Collateral (as hereinafter
defined)(the "Security Interest"). The Security Interest granted hereby
shall relate back to the date of the June 29th Purchase Agreement.
3. Collateral. The "Collateral" shall cover and include all right, title,
and interest of the Company in, to, and under all of the following,
whether now existing or hereafter acquired from time to time: (i) all
Accounts; (ii) all receivables; (iii) all General Intangibles; (iv) all
Goods, including, without limitation, all Equipment, and all Inventory,
whether now held or acquired in the future and wherever located,
including, but not limited to Inventory that is repossessed, returned or
acquired as a result of a
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"trade-in;" and (v) all letters of credit, notes, drafts, stock and
other debt and equity securities whether or not certificated, and all
instruments; (vi) all Chattel Paper and all Documents including without
limitation documents of title (vii) all Instruments; (viii) all contract
rights and all causes of action; (ix) all Deposit Accounts (general or
special) with, and all credits and other claims against, all-lenders or
other financial institutions; (x) all money; (xi) all property or
interests in property now or hereafter coming into the possession,
custody or control of the Company (whether for safekeeping, deposit,
custody, pledge, transmission, collection or otherwise); (xii) all
Proceeds including, without limitation, all proceeds of any loans,
including the Loan and all insurance proceeds of or relating to any of
the foregoing; (xiii) all books and records relating to any of the
foregoing; (xiv) all Fixtures, accessions and additions to,
substitutions for, and replacements, products and proceeds of any of the
foregoing and (xv) all rights to payment resulting from disposition or
other Transfer of any of the foregoing.
4. Preservation and Perfection of Security Interests. In connection
with the Security -------------------------------------------------
Agreement, the Company previously delivered to JNC one or more Uniform
Commercial Code Form 1 Financing Statements (collectively, "UCC Form 1")
with respect to the Security Interest. In addition, the Company shall, as
required from time to time by JNC, execute and deliver or endorse any and
all instruments, documents, conveyances, assignments, security agreements,
additional financing statements, continuation statements, and other
agreements and writings which JNC may request in order to create, perfect,
or continue the Security Interest or which JNC may otherwise reasonably
request in order to secure, protect or enforce the Security Interest or the
rights of JNC under this Security Agreement (but any failure to request or
assure that the Company execute, deliver or endorse any such item shall not
affect nor impair the validity, sufficiency or enforceability of this
Security Agreement or any security interests granted herein, regardless of
whether any such item was or was not executed, delivered or endorsed in a
similar context or on a prior occasion). A carbon, photographic or other
reproduction of this Security Agreement or of a financing statement is
sufficient as a financing statement.
5. Representations and Warranties of the Company. The Company hereby
incorporates by reference those representations and warranties set forth
in the JNC Transaction Documents, and further represents and warrants to
JNC:
a. Except for the rights granted hereunder and the related UCC Form 1
which was filed on June 26, 1998 with the California Secretary of State and
on June 29, 1998 with the Santa Xxxxx County Recorder, and also except for
that certain Writ of Attachment granted on or about December 31, 1998 in
favor of Lumen Intellectual Property Services, and that certain unsecured
personal property tax lien, copies of which have been provided to JNC by
the Company, the Company is the sole owner of the Collateral, free and
clear from any liens, security interests, encumbrances, rights or claims,
and is fully authorized to grant the Security Interest in and pledge the
Collateral, and the Collateral is not subject to any UCC financing
statement.
b. This Security Agreement is fully sufficient to create and
transfer to JNC, and shall create and transfer to JNC, a Security
Interest in and to all of the Company's right, title, and
interest in the Collateral, free and clear of any and all adverse
liens, claims, and encumbrances of any kind or nature, and the
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Company has not transferred, and shall not transfer any Security
Interest in the Collateral to any other person, without the prior
written consent of JNC.
c. This Security Agreement creates a valid and perfected security
interest in the Collateral, securing the performance of the
Obligations. All filings and other actions necessary to perfect
and protect such security interest have been made or taken by the
Company.
d. Except for the consent of JNC, which is implicit pursuant to this
Security Agreement, no consent of any person (including, without
limitation, stock holders or creditors of the Company) is
required for the subjection by the Company of the Collateral to
the terms of this Security Agreement.
6. Covenants of the Company. The Company hereby reaffirms and incorporates
those covenants set forth in the JNC Transaction Documents and further
covenants and agrees:
a. To appear and defend any and all actions and proceedings
affecting the Collateral, or otherwise affecting the Security
Interest, against any persons whatsoever, and the Company shall
obtain and furnish to JNC from time to time, upon demand, such
releases and/or subordinations of claims and liens which may be
required to maintain the priority of the Security Interest
hereunder.
b. To permit JNC, its representatives and its agents to inspect the
Collateral at any time, and to make copies of records pertaining
to the Collateral as may be requested by JNC from time-to-time.
c. At all times, to maintain the liens and security interests
provided for hereunder as valid and perfected first priority
liens and security interests in the Collateral hereby granted to
JNC.
d. That all Collateral shall, for the entire term of this Security
Agreement, be free and clear of any liens, mortgages, pledges, or
any other encumbrances of any kind or nature whatsoever, except
only for the security interests created by this Security
Agreement, or as otherwise consented to in writing by JNC.
e. Not to sell, lease, transfer or remove the Collateral, or any
part thereof, from its present location without first obtaining
the express written consent of JNC, except in the ordinary course
of business.
f. With respect to that part of the Collateral which is tangible,
the Company will maintain such Collateral in good order and repair and
will not use any part of such Collateral in any manner injurious or
likely to be injurious or which will result in its unreasonable
deterioration or consumption or which will be in violation of any laws
or regulations or any policy of insurance. With respect to Collateral
which is not tangible, the Company will take all steps reasonably
necessary to preserve and protect the value of such Collateral, and
the Company will diligently pursue and seek to preserve, enforce and
collect any rights, claims, causes of action and accounts receivable.
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g. To safeguard and protect all Collateral for the account of JNC
and make no disposition thereof other than in the ordinary course
of business. At the request of JNC, the Company will sign and
deliver to JNC, at any time or from time to time, one or more
financing statements pursuant to the UCC in form satisfactory to
JNC and will pay the cost of filing the same in all public
offices wherever filing is, or is deemed by JNC to be, necessary
or desirable and with respect to the Collateral.
h. To promptly notify JNC in sufficient detail upon becoming aware
of any attachment, garnishment, execution or other legal process
levied against any or all of the Collateral and of any other
information received by the Company that may materially affect
the value of the Collateral, the Security Interest or the rights
and remedies of JNC hereunder.
i. To maintain insurance on the Collateral against loss or damage by
fire, perils commonly covered under the extended coverage
endorsement, malicious mischief and sprinkler leakage.
7. Defaults. The following events shall be "Events of Default":
a. An Event of Default under any of the JNC Transaction Documents; or
b. The Company shall fail to observe or perform any of its
obligations hereunder for 20 days after receipt by the Company of
notice of such default from JNC; or
c. Any representation, warranty, certification or statement made by
the Company hereunder shall prove to have been incorrect in any
material respect when made.
8. Duty To Hold In Trust. Upon the occurrence of any Event of Default, the
Company shall, upon receipt by it of any revenue, income, or other sums
(collectively, the "Sums") subject to the Security Interest, whether
payable pursuant to the Debentures or otherwise, or of any check, draft,
note, trade acceptance or other instrument evidencing an obligation to
pay any such sum, hold the same in trust for JNC and shall forthwith
endorse and transfer any such sums or instruments, or both, to JNC for
application to the satisfaction of the Obligations.
9. Rights and Remedies Upon Default. Upon occurrence of any of
the above Events of -------------------------------- Default and at
any time thereafter, as long as any such Event of Default shall
continue, JNC may exercise any and all of the rights and remedies
conferred hereunder and under any of the JNC Transaction Documents,
including, without limitation, the right, to accelerate payment under
any or all Debentures, and JNC shall have all the rights and remedies
of a secured party under the UCC and shall further have, in addition
to all other rights and remedies provided herein or by law, the
following rights and powers:
a. JNC may enter upon the premises where any of the Collateral may
be located, and take possession of the Collateral, and demand and
receive reconveyance of the Collateral from any person who has
possession thereof, and JNC may take such measures as may be
necessary or proper for the care or protection
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of the value thereof, including the right to remove, keep and/or
store all or any portion of the Collateral or put a custodian in
charge thereof; and/or
b. At JNC's request, the Company shall assemble the Collateral and
make it available to JNC at places which JNC shall reasonably
select, whether at the Company's premises or elsewhere, and make
available to JNC, without rent, all of the Company's premises and
facilities for the purpose of JNC taking possession of, removing
or putting the Collateral in saleable or disposable form; and/or
c. With or without taking possession, JNC may sell or cause to be
sold, at any time, and from time to time, as JNC may determine, any of
the Collateral in its entirety or in parcels, either at public or
private sale, at such price and on such terms as JNC may deem best, at
which sale JNC may bid and purchase to the extent permitted by law, as
now or hereinafter in effect, all without (except as shall be required
by applicable statute and cannot be waived) advertisement or demand
upon or notice to the Company or right of redemption of the Company,
which are hereby expressly waived. The Company shall have no right of
redemption subsequent to any such sale, and hereby expressly waives
any such right. JNC shall apply the proceeds of any such sale or sales
first to the expenses incident thereto, including reasonable
attorneys' fees, and next to the full and complete satisfaction of all
of the Obligations. The Company shall remain fully liable to JNC for
any deficiency which may exist after any such sale or sales and the
application of the proceeds thereof in accordance herewith. Any
purchaser at any such sale or sales (including without limitation JNC)
shall thereafter hold any of the Collateral so purchased absolutely
free from any claim or right of any nature whatsoever by any other
person or entity (including without limitation the Company); and/or
i. Upon each such sale, JNC may, unless prohibited by
applicable statute which cannot be waived, purchase all or
any part of the Collateral being sold, free from and
discharged of all trusts, claims, right of redemption and
equities of the Company, which are hereby waived and
released.
ii. The proceeds of any such sale, lease, or other disposition of
the Collateral shall be applied first, to the expenses of retaking,
holding, storing, processing, and preparing for sale, selling, and the
like, and to the reasonable attorneys' fees and expenses incurred by
JNC, and then to satisfaction of the Obligations, and to the payment
of any other amounts required by applicable law, after which JNC shall
pay to the Company any surplus proceeds. If, upon the sale, lease or
other disposition of the Collateral, the proceeds thereof are
insufficient to pay all amounts to which JNC is legally entitled, the
Company will be liable for the deficiency, together with interest
thereon, at the rate of 18% per annum (the "Default Rate"), and the
reasonable fees of any attorneys employed by JNC to collect such
deficiency. To the extent permitted by applicable law, the Company
waives all claims, damages and demands against JNC arising out of the
repossession, removal, retention or sale of the Collateral, unless due
to the gross negligence or willful misconduct of JNC.
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d. Upon the occurrence and during the continuance of an Event of
Default, JNC shall have the right to send notice of the
assignment granted herein and the security interest created
hereunder to any account debtors of the Company or any other
persons obligated on, holding or otherwise concerned with, any of
the receivables, may demand that monies due or to become due be
paid to JNC and thereafter, JNC shall have the sole right to
collect the receivables and all books and records relating
thereto; and/or
e. JNC may institute any proceeding at law, in equity, or
otherwise in order to foreclose upon the Collateral or any part
thereof. To the extent permitted by law, any sale thereof shall be
held in the same manner, with the same effect and subject to the same
terms and conditions as specified in paragraph (c) of this Section 9.
JNC may, in the exercise of its sole and absolute discretion, from
time to time, at any time and in any order, choose to institute a
proceeding for foreclosure on some portion of the Collateral and/or a
sale under paragraphs (c) or (d) on other portions of the Collateral,
without being deemed to have made an election of remedies or to have
waived any other rights or remedies, and without in any other way
limiting any remedies or rights which it may otherwise have; and/or
f. In its name or in the name of the Company or otherwise, JNC
may demand, xxx for, collect, or receive any money or property at any
time payable or receivable on account of or in exchange for or make
any compromise or settlement deemed desirable with respect to, any of
the Collateral, but shall be under no obligation to do so, and JNC may
extend the time of payment, arrange for payment in installments, or
otherwise modify the terms of, or release, any of the Collateral,
without thereby incurring responsibility to, or discharging or
otherwise affecting any liability of, the Company or in any other way
limiting any remedies or rights which JNC may otherwise have; and/or
g. JNC may, in the event JNC takes possession of the Collateral
pursuant to the exercise of any right or remedy provided for hereunder
or by law, any insurance policy owned by the Company, together with
any unearned or prepaid premium thereon, shall, at the option of JNC,
be assigned by the Company to, and become the sole property of JNC,
provided that the amount of any such unearned or prepaid premium is
thereupon applied to the payment or satisfaction of the Obligations.
10. Responsibility for Collateral. The Company assumes all liabilities and
responsibility in connection with all Collateral, and the obligation of
the Company hereunder or under any of the JNC Transaction Documents, and
shall in no way be affected or diminished by reason of the loss,
destruction, damage, or theft of any of the Collateral or its
unavailability for any reason.
11. Security Interest Absolute. All rights of JNC and the Security Interest
hereunder, and all Obligations of the Company hereunder, shall be
absolute and unconditional, irrespective of: (a) any lack of validity or
enforceability of any of the JNC Transaction Documents or this Security
Agreement, and any agreement entered into in connection with the
foregoing, or any portion hereof or thereof; (b) any change in the time,
manner or place of payment or performance of, or in any other term of,
all or any of the Obligations, or any other amendment or waiver of or
any consent to any departure
8
from the JNC Transaction Documents; (c) any exchange, release, or
nonperfection of any of the Collateral, or any release or amendment or
waiver of or consent to departure from any other collateral for, or any
guaranty, or any other security, for all or any of the Obligations; (d)
any action by JNC to obtain, adjust, settle, and cancel in its sole
discretion any insurance claims or matters made or arising in connection
with the Collateral; or (e) any other circumstance which might otherwise
constitute any legal or equitable defense available to the Company, or a
discharge of all or any part of the Security Interest granted hereby.
Until the Obligations shall have been paid and performed in full, JNC's
rights shall continue even if the Obligations are barred for any reason,
including, without limitation, the running of the statute of limitations
or bankruptcy. The Company expressly waives presentment, protest, notice
of protest, demand, notice of nonpayment, and demand for performance.
This Security Agreement shall create a continuing security interest in
the Collateral and shall remain in full force and effect until the
Obligations shall have been paid and performed in full, and shall be
binding upon the Company and its successors and permitted transferees
and assigns. In the event that at any time any transfer of any
Collateral or any payment received by JNC hereunder shall be deemed by
final order of a court of competent jurisdiction to have been a voidable
preference or fraudulent conveyance under the bankruptcy or insolvency
laws of the United States, or shall be deemed to be otherwise due to any
party other than JNC, then, in any such event, the Company's obligations
hereunder shall survive cancellation of this Security Agreement, and
shall not be discharged or satisfied by any prior payment thereof and/or
cancellation of this Security Agreement, but shall remain a valid and
binding obligation enforceable in accordance with the terms and
provisions hereof. The Company waives all right to require JNC to
proceed against any other person or to apply any Collateral which JNC
may hold at any time, or to marshal assets, or to pursue any other
remedy. JNC may, at its election, exercise any right or remedy it may
have against any security held by JNC, including, without limitation,
the right to foreclose any such security by judicial or nonjudicial
sale, without affecting or impairing in any way the rights of JNC
hereunder. The Company waives any defense arising by reason of the
application of the statute of limitations to any obligation secured
hereby.
12. JNC Appointed Attorney-in-Fact. The Company hereby irrevocably makes,
nominates, constitutes and appoints JNC and each of its officers,
agents, successors, or assigns (with full power of substitution and
resubstitution), as the Company's true and lawful attorney-in-fact with
full power to take all actions and sign, execute, acknowledge, record,
and file, in the Company's name and for JNC's use and benefit, all
documents that shall be necessary to accomplish the following on the
occurrence of any Event of Default and at any time thereafter, so long
as such Event of Default shall continue:
a. To receive, open, and dispose of all mail addressed to the
Company which relates to the Collateral, or to endorse and
collect any notes, checks, drafts, money orders, or other
evidences of payment that may come into the possession of JNC;
b. To enforce all rights of the Company under and pursuant to any
agreements or other contractual arrangements relating to the
Collateral, and to enter into such other agreements as may be
necessary to exploit the Collateral;
c. To pay or discharge taxes, liens, security interests, or other
encumbrances at any time levied or placed on or threatened
against the Collateral; to demand,
9
collect, receipt for, compromise, settle, and xxx for monies due
in respect of the Collateral;
d. To execute and perform such other and further agreements,
documents, and instruments of any nature whatsoever, including,
but not limited to, the execution and filing of a UCC Form 1 and
to do any and all other things as JNC may deem necessary or
appropriate for the purpose of preserving, protecting or
maintaining the Collateral and the Security Interest granted to
JNC; and
e. Generally, to do, at the option of JNC and at the Company's
expense, at any time, or from time to time, all acts and things
which JNC deems necessary to protect, preserve, and realize upon
the Collateral and JNC's security interests therein in order to
effect the intent of this Security Agreement and of the Purchase
Agreements all as fully and effectually as the Company might or
could do.
The Company hereby ratifies all that said attorney shall lawfully do or
cause to be done by virtue hereof. This power of attorney is coupled
with an interest and shall be irrevocable for the term of this Security
Agreement and thereafter as long as any of the Obligations shall be
outstanding.
13. Duties of JNC.
a. The powers conferred on JNC hereunder are solely to protect
its interests in the Collateral and shall not impose any duty upon it
to exercise any such powers. Except for the safe custody of any
Collateral in its actual possession and the accounting for monies
actually received by it hereunder with respect to which JNC shall act
with reasonable care, JNC shall have no duty as to any Collateral or
as to the taking of any steps necessary to preserve its rights against
prior parties or any other rights pertaining to any Collateral. JNC
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is
accorded treatment that is substantially equal to that treatment which
JNC accords its own property in the ordinary course of its business.
b. If the Company fails to pay, before delinquency, any taxes or
other governmental charges which may be levied against the Collateral
or its operation or use, or any assessments made against the
Collateral, or fails to make any payment or to take any action
required herein or in the JNC Transaction Documents, or to take any
other action necessary to preserve the priority and value of JNC's
rights under this Security Agreement, then JNC may (but shall not be
obligated to) make such payments and take all such actions as JNC
deems necessary to protect its security interest in or to protect and
preserve the value of the Collateral, and JNC is hereby authorized
(without limiting the general nature of the authority hereinabove
conferred) to pay, purchase, contest, or compromise any encumbrances,
charges, or liens which in the judgment of JNC appear to be prior to
or superior to, or of equal priority with, the Security Interest. Any
amount so paid shall be included in the Obligations secured hereby and
shall bear interest thereon at the Default Rate from date of payment
until repaid, and shall be secured pursuant to the terms
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of this Security Agreement by the Collateral and shall be
repayable by the Company on demand.
14. Expenses. In addition to expenses payable under the Transaction Documents,
the -------- Company agrees to pay all out of pocket fees, costs, and
expenses incurred in the filing of the UCC Form 1 or any other financing
statements, continuation statements, partial releases, and/or termination
statements related thereto or any expenses of any searches reasonably
required by JNC. The Company shall also pay all other claims and charges
which in the reasonable opinion of JNC might prejudice, imperil, or
otherwise affect the Collateral or the Security Interest therein. All
expenses so incurred shall be immediately paid by the Company upon demand
by JNC. The Company will also, upon demand, pay to JNC the amount of any
and all reasonable expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, which JNC may incur in
connection with (i) the administration of this Security Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement
of any of the rights of JNC hereunder or under the JNC Transaction
Documents, or (iv) the failure by the Company to perform or observe any of
the provisions contained herein or in the JNC Transaction Documents. Until
so paid, any fees payable hereunder shall be added to the principal amount
of the Obligations and shall bear interest at the Default Rate.
15. Term of Agreement. This Security Agreement shall terminate when all
payments under the JNC Transaction Documents have been made in full and
all other Obligations have been paid or discharged. Upon such
termination, JNC, at the request and at the expense of the Company, will
join in executing any termination statement with respect to any
financing statement executed and filed pursuant to this Security
Agreement.
16. Other Security. To the extent that the Obligations are now or hereafter
secured by property other than the Collateral or by the guarantee,
endorsement, or property of any other person, firm, corporation, or
other entity, then JNC shall have the right, in its sole discretion, to
pursue, relinquish, subordinate, modify, or take any other action with
respect thereto, without in any way modifying or affecting any of JNC's
rights and remedies hereunder.
17. Miscellaneous.
a. Indemnity. The Company agrees to defend, protect, indemnify,
and hold --------- harmless JNC and each and all of its respective
officers, directors, employees, attorneys, and Agents (collectively
called the "Indemnitees") from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses, and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative, or judicial proceeding, whether or not
such Indemnitees shall be designated a party thereto), which may be
imposed on, incurred by, or asserted against such Indemnitees (whether
direct, indirect, or consequential and whether based on any federal or
state laws or other statutory regulations, including, without
limitation, securities and commercial laws and regulations, common law
or at equitable cause, or contract or otherwise) in any manner
relating to or arising out of this Security Agreement or the
Obligations, or any act, event, or transaction related or attendant
thereto, including, without
11
limitation, any and all costs and expenses incurred in the
enforcement of this Security Agreement (collectively, the
"Indemnified Matters"). To the extent that the undertaking to
indemnify, pay, and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law
or public policy, the Company shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable
law, to the payment and satisfaction of all Indemnified Matters
incurred by the Indemnitees.
b. Course of Dealing. No course of dealing between the Company and
JNC, nor any failure to exercise, nor any delay in exercising, on
the part of JNC, any right, power, or privilege hereunder or
under the JNC Transaction Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right,
power, or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege.
c. Remedies Cumulative. Except as otherwise expressly provided
herein, no ------------------- remedy conferred by any of the specific
provisions of this Security Agreement is intended to be exclusive of
any other remedy which is otherwise available at law, in equity, by
statute, or otherwise, and except as otherwise expressly provided for
herein, each and every other remedy shall be cumulative and shall be
in addition to every other remedy given hereunder or otherwise. The
election of any one or more of such remedies by any of the parties
hereto shall not constitute a waiver by such party of the right to
pursue any other available remedies.
d. Notices. All notices, requests, demands, deliveries, and other
communications hereunder shall be in writing and, except as otherwise
specifically provided in this Security Agreement, shall be deemed to have been
duly given, upon receipt, if delivered personally or via fax, or ten (10)
business days after deposit in the mail, if mailed, first class with postage
prepaid to the parties at the following addresses:
If to JNC, to:
JNC Strategic Fund Ltd.
c/o Olympia Capital (Cayman) Ltd.
Xxxxxxxx Xxxxx
00 Xxxx Xxxxxx
Xxxxxxxx XX00
Xxxxxxx
Attn: Director
Fax: (000) 000-0000
with a copy to:
Encore Capital Management, LLC
00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Managing Director
Fax: (000) 000-0000
and
12
Xxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxx, Esq.
Fax: 000-000-0000
If to the Company, to:
InnovaCom, Inc.
0000 Xxxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Attn: Xxxxx Xxxxxx, President
Fax: 000-000-0000
with a copy to:
Xxxxxx Eng Xxxx & Xxxxxxxx
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Fax: 000-000-0000
d. Headings. The section headings contained in this Security
Agreement are for convenience only and shall not control or
affect the meaning or construction of any of the provisions of
this Security Agreement.
e. Governing Law. This Security Agreement shall be construed in
accordance with the laws of the State of New York, except to the
extent the validity, perfection or enforcement of a security
interest hereunder in respect of any particular Collateral are
governed by a jurisdiction other than the State of New York in
which case such law shall govern.
The Company and JNC hereby irrevocably submit to the jurisdiction
of any New York State or United States Federal court sitting in
Manhattan county over any action or proceeding arising out of or
relating to this Security Agreement, and the Company and JNC
hereby irrevocably agree that all claims in respect of such
action or proceeding may be heard and determined in such New York
State or Federal court. The Company and JNC agree that a final
judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. The Company and JNC further
waive any objection to venue in such State and any objection to
an action or proceeding in such State on the basis of forum non
conveniens.
f. Amendments, etc. Any of the terms and provisions of this Security
Agreement may be waived at any time by the party which is
entitled to the benefit thereof, but only by a written instrument
executed by such party. This Security Agreement may be amended
only by an agreement in writing executed by JNC and the Company.
13
g. Severability. In the event that any provision of this Security
Agreement is held ------------ to be invalid, prohibited or
unenforceable in any jurisdiction for any reason, unless such
provision is narrowed by judicial construction, this Security
Agreement shall, as to such jurisdiction, be construed as if such
invalid, prohibited or unenforceable provision had been more narrowly
drawn so as not to be invalid, prohibited or unenforceable. If,
notwithstanding the foregoing, any provision of this Security
Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be
ineffective to the extent of such invalidity, prohibition or
unenforceability without invalidating the remaining portion of such
provision or the other provisions of this Security Agreement and
without affecting the validity or enforceability of such provision or
the other provisions of this Security Agreement in any other
jurisdiction.
x. Xxxxx, Etc. No delay or omission to exercise any right, power, or
remedy accruing to any party hereto shall impair any such right,
power, or remedy of such party nor be construed to be a waiver of
any such right, power, or remedy nor constitute any course of
dealing or performance hereunder.
i. Costs and Attorneys' Fees. If any action, suit, arbitration
proceeding, or other proceeding is instituted arising out of this
Security Agreement, the prevailing party shall recover all of
such party's costs, including, without limitation, the court
costs and reasonable attorneys' fees incurred therein, including
any and all appeals or petitions therefrom.
j. Counterparts. This Security Agreement may be executed in one or
more counterparts, each of which may be deemed an original, but
all of which together, shall constitute one and the same
instrument. This Security Agreement may be executed by a party
and sent to the other parties via facsimile transmission and the
facsimile transmitted copy shall have the same integrity, force,
and effect as an original document.
k. Entire Agreement. This Security Agreement and the other
agreements referred to herein supersede all prior negotiations
and agreements (whether written or oral) and constitute the
entire understanding among the parties hereto, it being
understood that this Security Agreement relates back to the date
of the June 29th Purchase Agreement.
[remainder of this page intentionally left blank]
14
IN WITNESS WHEREOF, the Company has caused this Third Amended And
Restated Security Agreement to be duly executed and delivered by its officers
thereunto duly authorized effective as of January 14th, 1999.
INNOVACOM, INC.
By:_____________________________________
Xxxxx Xxxxxx
President
Accepted and agreed, effective
as of this 14th day of January, 1999
JNC STRATEGIC FUND LTD.
By:_______________________________
Its:______________________________
